M&C Saatchi Group’s new global CEO Zaid Al-Qassab has said that he is “delighted” with his first set of financial numbers, released last week.
The key top lines for M&C were four and six per cent lifts in revenue — to £211.5 million — and net revenue — £120.1 million — from H1 2023 to H1 2024, respectively, and a pretty remarkable 40 per cent lift in operating profit from £12.2 to £17.7 million ($AU23.9 and $AU34.6 million, respectively).
“I am delighted to present this strong set of results, my first as CEO, which demonstrate the benefits of our ongoing transformation and diversity of our specialisms. Whilst preserving creativity at the heart of all we do, and leveraging the power of our global brand, we are creating a more agile, integrated, regional-first operating model which focuses on growth,” said Al-Qassab.
“My first impressions of the Group are incredibly positive: from the diversity of the businesses, operating from twenty-three geographies, the breadth of our capabilities, and the fantastic global brand of M&C Saatchi, to the creative and talented minds delivering inspiring work and outstanding service to our clients.
“We continue to make great progress in building a strong platform to deliver sustainable organic growth through our self-help initiatives and wider transformation. Our increasingly diversified revenue provides greater resilience against macro volatility, and our higher-margin businesses continue to be our highest growth contributors. Whilst there is always more to do, we are excited about the further potential we can unleash.
It should be noted, however, that these results are on a like-for-like basis, rather than a statutory basis. In essence, like-for-like results remove one-off and exceptional costs in the hope of giving a more accurate picture of a business’ trajectory.
On a statutory basis, net revenue was flat and gross revenue declined one per cent.
Regardless, M&C’s core Advertising business saw “significantly” improved performance, driven by the US, Middle East and European businesses while the closure of its “loss-making” businesses drove profitability. As a result, M&C’s Advertising net revenue was £45.2 million ($AU88.35 million) up six per cent, contributing 38 per cent to Group net revenue. M&C’s Operating profit was £5.1 million ($AU9.97 million) up 183 per cent. Its operating margin was 11.4 per cent (+7.2ppts).
Its non-advertising Specialisms business saw strong performance thanks to the security and government segments (up 30 per cent) and some recovery in Media (up three per cent).
For the Australian arm of the business, the outlook isn’t quite so rosy.
“Market conditions in Australia and the UK remain challenging, largely due to subdued consumer sentiment and macro challenges,” said M&C’s financial report. M&C also said that it is continuing “rationalising office space, particularly in the UK, the US and Australia”.
S4 Capital
Onto Sir Martin Sorrell’s S4 Capital now. The holding company that owns Monks (formerly media.monks) hasn’t had the best time of it in recent months. Sorrell has blamed a bearish tech industry for much of its reduced performance.
This set of H1 numbers is broadly the same with a 16.2 per cent drop in like-for-like revenue from £517.1 million to £422.5 million ($AU1 billion to $AU825.77 million). S4’s billings also dropped on a reported basis to £908.9 million from £925.4 million ($AU1.77 billion to ($AU1.808 billion).
“We continue to streamline and integrate our businesses. We have recently rebranded to just Monks and we are focusing all our current capabilities into two practices: Marketing Services and Technology Services. Our tagline ‘faster, better, cheaper, more’ or ‘speed, quality, value, more’ and a unitary structure both appeal strongly to clients, even more so in challenging economic times. Client behaviour and budgets are changing, driven by Artificial Intelligence (AI) and new ways of working and we believe we are well positioned to take advantage of the opportunities all this provides and are encouraged by recent wins that leverage our AI tools and capabilities,” S4 said in its results.
“All Practices have seen some impact from the net revenue reductions, most evident in Technology Services reflecting anticipated lower transformation revenue from one client. Profitability by Practice in the first half reflects significant improvements in margins in both Content and Data&Digital Media, due to the actions taken on costs, whilst Technology Service’s profitability is lower, as expected, due to revenue reduction.”
S4’s Asia Pacific revenue was down 8.6 per cent and accounts for six per cent of the company’s revenue on a like-for-like basis. Its Americas net revenue was down 14.9 per cent and now accounts for 78 per cent of the S4’s net revenue while EMEA now accounts for 16 per cent is down 7.9 per cent.
